Google Fiber: Why Traditional ISPs Are Officially On Notice

A few years ago, when Google was determining which city to launch its pilot Google Fiber program, cities all over the country went all-out trying to persuade the search giant to bring all that fantastical bandwidth to their neck of the woods. And with good reason: Google Fiber offers gigabit Internet speeds and even TV service, all at prices that meet or beat the competition. In fact, the lowest tier of Google Fiber service (5Mbps down, 1Mbps up) is free once users pay a $300 construction fee.

Eventually, Kansas City was the lucky locale chosen for the Google Fiber launch, and by all accounts things are going swimmingly, and Google is slowly but surely rolling out service to nearby areas, including Mission Woods, Westwood, and Westwood Hills. This week, Google announced that Austin, Texas was the next area to get the Google Fiber treatment.

If ISPs were concerned before, they should really start sweating it now. Although Google Fiber looked like it would whip traditional ISPs in every regard--indeed, Time Warner Cable allegedly cut prices and boosted speeds for some users in Kansas City in a desperate attempt to keep them as customers--surely ISPs were hoping the pilot program would flame out. Now that Austin is happening, it’s clear that it’s only a matter of time before Google rolls out its service in many more cities.

Further, this jump from piddly Internet speeds to gigabit-class service is not just about people wanting to download movies faster; it’s a sea change in what the Internet is capable of, and the world is craving bandwidth.

For example, video chat is emerging as a powerful means of communication, be it between relatives living on separate coasts, business associates working on a project in different locations, or doctors diagnosing patients from across the world. Currently, even the best connections are relatively low-res, with terrible latency and frequent drops or lags. Imagine a world where all of the above is streamed over a gigabit connection capable of clear and consistent sound and images that can also handle pertinent content such as audio or video streams; it’s a game changer, and that’s just a single use case. Imagine what could be developed in the fields of scientific research, medicine, and education.

More exciting is the fact that there are use cases nobody has thought of yet, because Internet speeds have been so a tight bottleneck. This is akin to the shift from from horse and buggy to the automobile; once cars became affordable for most Americans, the whole country changed dramatically.

A byproduct of Google Fiber invading previously secured space is that ISPs have to adapt their current services to survive. There are two ways that will happen; one is that they’ll have to deeply slash prices on lower tiers of Internet service (and probably bundle some value-adds, to boot), which will be a boon for customers who currently can’t afford broadband. The other is that the competition will have to roll out commensurate services (i.e., gigabit Internet). In fact, that’s already happening; AT&T just announced that it too is planning to build a gigabit fiber network in Austin.

Another reason ISPs have to fear Google Fiber is that Google is a company rolling in money from a wide variety of sources, which means that it can invest heavily in new infrastructure without risking the farm, so to speak. Further, unlike Search, which is a free service that Google has to pay for with ads, the company is charging money for (most of) its Google Fiber services; it’s a self-sustaining business, which should allow Google to build out faster without investing as much money generated from other sources.

Complete Google Fiber package

Yes, continued rollouts of Google Fiber will take time--a lot of time--and naysayers will point out that building all that infrastructure is a near impossibility, but Google is really good at doing impossible things to scale. For example, this is a company that is busily mapping the entire world, one picture and satellite image at a time.

For that matter, people said the same thing about the railroads. And electrical grids. And telephone lines. And so on. ISPs better get cracking on some competitive solutions quickly, or they’ll just be another dot in the history of Internet communications.